(Corrects sales in fourth paragraph of story originally published June 21.)
Archer-Daniels-Midland Co. (ADM:US), the world’s largest corn processor, is in talks to sell its cocoa unit, which swung to an operating loss in the first quarter amid a squeeze on processing margins.
“We regularly evaluate strategic options and maintain ongoing dialogue with other agribusiness companies to explore opportunities,” Jackie Anderson, an ADM spokeswoman, said yesterday in a statement. “These discussions are ongoing, and there can be no assurance that they will result in the signing of a transaction or definitive agreement.”
The cocoa unit posted a $22 million operating loss in the first quarter, compared with profit of $159 million a year earlier. Processing margins were lower because of an increase in the industry’s grinding capacity, lower cocoa-powder prices and customers using up inventories, the Decatur, Illinois-based company said May 1.
ADM’s cocoa business is part of its oilseeds-processing division and accounted for $833 million of sales, or 3.8 percent of the company’s total first-quarter revenue, according to data compiled by Bloomberg.
ADM paid $470 million for W.R. Grace & Co.’s cocoa business in 1996, its largest acquisition prior to the A$2.2 billion ($2 billion) takeover bid for of Australia’s GrainCorp Ltd. (GNC) announced in October.
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